£120m luxury hotel set for prime site in the heart of capital

Peveril Securities, the development arm of the privately owned construction company Bowmer & Kirkland, has bought 3-8 St Andrew Square for about £20m, according to the trade magazine, Property Week International.

The building, formerly the headquarters of insurance firm Scottish Provident, has been branded a “gap site” after lying empty for four years

The plan to build a luxury hotel is the second that has been earmarked for St Andrew Square in recent months, as interest in the capital’s tourism market grows.

Insurance giant Royal London last year revealed it had applied to change 19 St Andrew Square, on the west side, from an office to a hotel.

The recently refurbished square has been touted as a potential home for a new hotel since Harvey Nichols opened its doors there in 2002, but previous schemes have so far failed to come to fruition.

Vladimir Romanov, the owner of Heart of Midlothian FC, snapped up the former RBS building on the east side of the square with hopes of turning it into a hotel, but so far no plans have emerged.

Chris Dougray, the head of office for agent Lambert Smith Hampton, said there were at least a dozen operators currently looking to establish hotels in the capital.

“The site represents one of the best development opportunities in central Edinburgh and it will be good to see activity on the site,” he said.

“St Andrew Square is changing. I am aware of four hotel proposals being worked on at this location. This is underpinned by the weight of operator demand in the city as whole,” he added.

Councillor Tom Buchanan, Edinburgh’s economic development convener welcomed the fresh investment in the city square. He said: “It is an investment in the future but also an investment in confidence in the Edinburgh economy moving ahead.

“We are the second city outside of London for people wanting to invest. Their desire to look to the five-star hotel market is very much in tune with what we are hearing about interest in the city.

“There is clear interest in hotels and the hotel market.

“It should be a good addition to the square and I look forward to seeing the design.”

Mr Buchanan confirmed that the city’s planners would also welcome the change of use from offices to a hotel.

“We shouldn’t be against change just because it is change,” he said. “I would encourage discussions with our planning team as soon as possible to make sure it is appropriate.”